The RBI’s decision to maintain the crucial benchmark policy rate at 6.5 percent on Thursday caused the rupee to pare early losses and close 2 paise weaker at 81.92 (provisional) against the U.S. dollar. Forex traders claimed that after the Reserve Bank of India (RBI) stunned the market by halting the rate hike, the Indian rupee experienced volatility.
At the interbank foreign exchange, the local unit started the day weakly versus the dollar at 81.95 and ultimately closed the day at 81.92 (provisional), 2 paise weaker than its previous close. The rupee increased 42 paise on Wednesday to settle at 81.90 against the U.S. dollar.
The Reserve Bank of India (RBI) decided to maintain the important benchmark policy rate at 6.5 percent on Thursday, despite the fact that inflation is now rising above the bank’s tolerance range. Six rate increases in a row totaling 250 basis points since May 2022 have caused the rate hike to be put on hold.
Reserve Bank Governor Shaktikanta Das stated that the Indian Rupee has been moving steadily in 2022 and will continue to do so in 2023. This reflects the robustness of the domestic macroeconomic fundamentals and the adaptability of the Indian economy to global spillovers. He continued, “RBI remains vigilant and committed to upholding the stability of the Indian rupee.”
The dollar index, which measures the value of the dollar against a basket of six different currencies, increased by 0.08 percent to 101.93. The benchmark for world oil, Brent crude futures, fell 0.16 percent to USD 84.85 a barrel.
